TaxTMI Updates e-Newsletter
Dec 12,2018

Government Entity - concessional rate for composite supply of works contract - original works - procurement by a Government Entity in relation to a work entrusted to it - composite supply of works contract

Government Entity - established by any Government with 90 per cent. or more participation by way of equity or control - CIDCO falls within the definition of "Government Entity" as inserted by Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017. - HELD THAT: - The Authority examined the founding resolutions and notifications by the Government of Maharashtra establishing CIDCO, including the Government Resolutions dated 18.03.1970 and 24.01.1972 and the Notification dated 20.03.1971, which demonstrate that CIDCO was constituted and operates under the control and supervision of the State Government and is wholly owned by it. The statutory definition inserted by Notification No. 31/2017 describes a "Government Entity" as an authority, board or other body set up by statute or established by any Government with 90% or more participation by way of equity or control to carry out functions entrusted by the Central/State/UT or local authority. On the material before it, the Authority found that CIDCO is established by the State Government with 100% participation by way of equity and control and performs functions entrusted by the State Government, thereby satisfying the definition.

Answered in the affirmative; CIDCO is a "Government Entity" for the purposes of Notification No. 31/2017.

Concessional rate for composite supply of works contract - original works - procurement by a Government Entity in relation to a work entrusted to it - composite supply of works contract - Contracts executed by the applicant for CIDCO qualify for the concessional GST rate (12% aggregate) under the amended notifications with effect from 13.10.2017. - HELD THAT: - The Authority considered whether the applicant's contracts are "original works" and fall within item (vi) of the Table to the relevant notifications as amended. Taking the applicant's description of the works (new power supply infrastructure, erection/commissioning/installation of substations and allied works) and established definitions and manuals into account, the works were treated as "original works" and, after the amendment by Notification No. 31/2017, services supplied to a "Government Entity" for such original works are attractively placed at the concessional rate provided the procurement by the Government Entity is in relation to a work entrusted to it by the Central/State/UT or local authority. On the material before it the Authority found that CIDCO is a Government Entity and that the cited contracts relate to works entrusted to CIDCO (with procurement for specified projects shown for the work orders considered). Consequently, the concessional rate introduced by the amendments applies to the applicant's supplies with effect from the amendment date.

Concessional rate of tax (6% CGST + 6% SGST) is applicable to the applicant's contracts for CIDCO, with effect from 13.10.2017.

Final Conclusion: The Advance Ruling holds that CIDCO is a "Government Entity" within the meaning of Notification No. 31/2017 and that the applicant's contracts for original works executed for CIDCO qualify for the concessional composite works-contract rate (6% CGST + 6% SGST) as amended, with effect from 13.10.2017.

Supply - business (provision of facilities or benefits to members) - consideration - definition of supplier and recipient - principle of mutuality - registration requirement under GST

Supply - business (provision of facilities or benefits to members) - consideration - definition of supplier and recipient - Applicability of GST registration and tax on fees collected from members by the Lions Club of Poona Kothrud - HELD THAT: - The Authority examined whether amounts collected as members' fees constitute a 'supply' of goods or services for a 'consideration' in the 'course or furtherance of business' so as to attract GST and require registration. Clause (e) of the definition of 'business' contemplates provision of facilities or benefits to members for a subscription or consideration. On the facts presented the club collects fees to pool funds for meeting and administrative expenses and for advancing the club's social objectives; it does not provide facilities or benefits to members qua a supply of goods or services. The definition of 'supplier' contemplates a person who provides goods or services; absent a supply of facilities or benefits to members there is no supplier-recipient transaction in respect of the membership fees. The Authority therefore concluded that, on the material before it, the receipts from members are not payments for a supply of goods or services and do not satisfy the linked ingredients of 'consideration' and 'business' required under section 7 to constitute a taxable supply. Consequently, the requirement for registration based on such receipts does not arise.

Answered in the negative - membership fees as described do not constitute a taxable supply under the GST Act and do not require registration.

Final Conclusion: The Advance Ruling holds that, on the facts placed before it, the fees collected from members by the Lions Club of Poona Kothrud are not consideration for a supply of goods or services in the course or furtherance of business and therefore do not attract GST or a registration obligation under the GST Act.

Release of seized goods under Section 129(1) of the U.P. GST Act - security for release under Section 129(1)(a) of the U.P. GST Act - security for release under Section 129(1)(b) of the U.P. GST Act - rights of purchaser as owner of goods

Rights of purchaser as owner of goods - release of seized goods under Section 129(1) of the U.P. GST Act - security for release under Section 129(1)(a) of the U.P. GST Act - Entitlement of the purchaser (owner) to release of seized goods on furnishing security equivalent to that prescribed under Section 129(1)(a) of the U.P. GST Act where goods have been seized under Section 129(1). - HELD THAT: - The petitioner, being the purchaser and thereby the owner of the seized goods, cannot be required to furnish the security demanded under the release order framed on the basis of the provision applicable to persons in custody of the goods. The court observed that where goods are seized under Section 129(1) and the claimant is the owner/purchaser, the appropriate security for release is that which corresponds to the requirement under Section 129(1)(a) of the U.P. GST Act. Accordingly, the release should be ordered upon the petitioner furnishing security equivalent to that provided under Section 129(1)(a).

Goods to be released to the petitioner on the petitioner furnishing security equivalent to that required under Section 129(1)(a) of the U.P. GST Act.

Final Conclusion: The writ petition is disposed of by directing release of the seized goods to the petitioner (as purchaser and owner) upon furnishing security equivalent to that prescribed under Section 129(1)(a) of the U.P. GST Act.

Summary order. Issue notice returnable on 10th January, 2019; direct service permitted.

Summary order. Special Leave Petition dismissed on the ground of low tax effect; question of law expressly left open.

Prosecution under Section 276CC for failure to file return - Benefit of proviso to Section 276CC limited to voluntary filing under Section 139(1) - Failure to comply with notice under Section 142(1) constitutes a distinct offence - Quashing of criminal proceedings under inherent jurisdiction of Section 482 Cr.P.C.

Benefit of proviso to Section 276CC limited to voluntary filing under Section 139(1) - Prosecution under Section 276CC for failure to file return - Proviso to Section 276CC does not extend to returns filed after detection and issuance of notice under Section 142(1) and thus does not bar prosecution in such cases. - HELD THAT: - The Court followed the reasoning in Sasi Enterprises that the proviso to Section 276CC is confined to voluntary belated filing under Section 139(1) before detection and issuance of notice under Sections 142 or 148. The proviso therefore affords relief to genuine assessees who file belated returns within the end of the assessment year but does not apply once the failure is detected and a notice under Section 142(1) or Section 148 is issued. Applying that principle to the facts, the petitioners, having failed to file within the prescribed time and having been the subject of a Section 142(1) notice, could not claim the protection of the proviso against prosecution under Section 276CC. [Paras 5]

Proviso to Section 276CC not available where return is filed after detection and issuance of notice under Section 142(1); prosecution under Section 276CC may proceed.

Failure to comply with notice under Section 142(1) constitutes a distinct offence - Prosecution under Section 276CC for failure to file return - Non-compliance with a statutory notice under Section 142(1) constitutes a separate and distinct offence under Section 276CC, independent of the earlier failure to file under Section 139(1). - HELD THAT: - Relying on precedent considered in this Court (Karan Lutra) and the Sasi Enterprises ratio, the Court observed that disobedience of the obligations under Section 139(1) and under a notice issued under Section 142(1) are separate statutory breaches. Each breach can give rise to an independent offence under Section 276CC. The assessing proceedings and criminal prosecutions are distinct; while assessment outcomes may affect invocation of the proviso, they do not inhibit continuation of criminal process for non-compliance with a Section 142(1) notice. [Paras 6, 7]

Failure to comply with a Section 142(1) notice prima facie constitutes a distinct offence permitting criminal proceedings to continue.

Quashing of criminal proceedings under inherent jurisdiction of Section 482 Cr.P.C. - Exercise of the Court's inherent jurisdiction under Section 482 Cr.P.C. to quash the summoning order was not warranted on the facts; the petition to quash was dismissed. - HELD THAT: - The petitioners sought quashing of the Metropolitan Magistrate's summoning order on the ground that returns were ultimately filed and that refunds rather than tax liability were claimed. The Court, applying the legal principles on availability of proviso and the distinctness of offences for non-compliance with Section 142(1), found no merit in the contention that the proceedings constituted an abuse of process. Given the existence of prima facie offences arising from non-compliance and the inapplicability of the proviso, the inherent jurisdiction under Section 482 Cr.P.C. was not invoked to set aside the summons. [Paras 8]

Petition under Section 482 Cr.P.C. dismissed; summoning order upheld and criminal proceedings permitted to continue.

Final Conclusion: The Court held that the proviso to Section 276CC applies only to voluntary belated filing under Section 139(1) before detection; non-compliance with a Section 142(1) notice constitutes a separate offence and, on the facts, the petition under Section 482 Cr.P.C. to quash the summoning order was dismissed.

Revenue recognition of receipts from prepaid cards - Accrual versus receipt (income accrues when right to appropriate exists) - Matching principle in accounting - Application of Accounting Standards to recognition of service revenue - Income on lapse of prepaid card taxable when amount is forfeited - Restoration to Assessing Officer for limited verification of revenue leakage

Revenue recognition of receipts from prepaid cards - Accrual versus receipt (income accrues when right to appropriate exists) - Application of Accounting Standards to recognition of service revenue - Matching principle in accounting - Taxability year of unutilized amounts received on sale of prepaid telecom cards - HELD THAT: - The Court upheld the Tribunal's conclusion that amounts received for prepaid talk time do not automatically accrue as income in the year of sale where the assessee remains under an obligation to provide services; revenue may be recognised on actual usage or by a recognized accounting method (proportionate completion/percentage of completion) in accordance with Accounting Standards. The determinative legal principle is that income accrues only when the assessee has a right to appropriate the receipt to the exclusion of the payer; advance payments for services outstanding at year end are akin to deposits/advances and, under the matching principle, may be carried forward and taxed in the year in which services are performed. Authorities and Accounting Standards were applied to conclude that the assessee's method of accounting for prepaid cards is permissible and revenue neutral over time. However, amounts that become forfeited on expiry of the card are to be recognised and taxed in the year of lapse. [Paras 11, 14, 16, 19, 20]

The method of recognising revenue on prepaid cards on the basis of actual usage was upheld; unutilized prepaid amounts are not taxable in the year of sale so long as the obligation to provide talk time subsists, but forfeited amounts on expiry are taxable in the year of lapse.

Restoration to Assessing Officer for limited verification of revenue leakage - Appeal effect order to avoid double taxation - Limited remand to verify whether unutilized/prepaid amounts forfeited in subsequent years were declared and to ensure consequential adjustments between assessment years - HELD THAT: - The Tribunal had restored the matter to the Assessing Officer for the specific purpose of verifying whether revenue in respect of expired prepaid cards was declared in subsequent years and to guard against revenue leakage. The High Court accepted that restoration and directed that while passing appeal-effect orders the Assessing Officer should ensure that any addition made in an earlier year is correspondingly adjusted in the relevant subsequent year so as to avoid double taxation; the remand is confined to verification of accounting for expired/prepaid talk-time and related adjustments. [Paras 6, 7]

Matter remanded to the Assessing Officer for limited verification whether the assessee declared revenue in respect of expired prepaid cards in subsequent years and for passing consequential appeal-effect orders to prevent double taxation.

Final Conclusion: The Tribunal's order upholding the assessee's accounting treatment for prepaid cards is affirmed: unutilized prepaid amounts are not taxable in the year of sale while the obligation to provide services subsists, forfeited amounts on expiry are taxable when forfeited, and the matter is remitted to the Assessing Officer for limited verification and consequential adjustments to prevent double taxation.

Addition under Section 68 (unexplained cash deposits) - explanation of source of cash deposits - sale of ancestral personal effects as source of funds - admission of additional evidence under Rule 46A - remand for fresh consideration

Addition under Section 68 (unexplained cash deposits) - explanation of source of cash deposits - sale of ancestral personal effects as source of funds - Validity of the addition of Rs. 10,17,650 made on account of unexplained cash deposits in the appellant's Axis Bank account - HELD THAT: - The Court upheld the Tribunal's and CIT(A)'s finding that the appellant failed to substantiate the claimed source of the cash deposits by cogent documentary evidence. The appellant's explanation that the deposits derived from sale proceeds of wearing apparel and silver utensils of ancestral description was not supported by acquisition details, sale documents, or any other corroborative material. The appellate fora were entitled to treat the deposits as income from undisclosed sources under the principle that unexplained cash credits, unsupported by credible evidence, may be added to income. Consequently, the impugned addition generally does not require interference. [Paras 13]

Addition of Rs. 10,17,650 on account of unexplained cash deposits is upheld except insofar as expressly remanded by the Court.

Admission of additional evidence under Rule 46A - remand for fresh consideration - Limited remand to the Tribunal for fresh consideration of whether Rs. 4,92,900 of the deposits was traceable to earlier cash withdrawals of Rs. 5,10,550 - HELD THAT: - The Court found that the first appellate order rejected the explanation concerning re-deposit of withdrawn cash by relying on a new line of reasoning (questioning why cash would be withdrawn only to be redeposited) which had not been raised at the assessment stage and therefore took the appellant by surprise. The Tribunal had not adverted to the appellant's contention and the documentary evidence of cash withdrawals placed on record. In these circumstances the Court remanded the specific aspect relating to Rs. 4,92,900 for fresh consideration by the Tribunal, permitting the appellant to move for admission of additional evidence under Rule 46A to justify the substantial cash withdrawals made between 12 June 2009 and 16 October 2009. The remand is confined solely to this limited factual issue and does not extend to the claim of sale of wearing apparel and silver utensils. [Paras 15, 16]

Matter remanded to the Tribunal to re-examine, and decide after permitting additional evidence if necessary, whether Rs. 4,92,900 of the deposits is satisfactorily explained as re-deposited withdrawn cash.

Final Conclusion: The substantial question of law is answered partly in favour of the appellant: the Tribunal's and CIT(A)'s upholding of the unexplained deposit addition is sustained generally, but the limited issue whether Rs. 4,92,900 of the deposits was traceable to prior cash withdrawals is remanded to the Tribunal for fresh consideration, with liberty to file additional evidence under Rule 46A; no order as to costs.

Unexplained cash credits under section 68 of the Income Tax Act - burden of proof to explain source of cash deposits - finality of Tribunal's factual findings - condonation of delay

Unexplained cash credits under section 68 of the Income Tax Act - burden of proof to explain source of cash deposits - Sustenance of addition in respect of cash deposits treated as unexplained cash credits and their inclusion in taxable income - HELD THAT: - The Court upheld the concurrent factual findings of the Assessing Officer, Commissioner (Appeals) and the Tribunal that cash deposits of Rs. 35,25,000/- in the year relevant to FY 2010-11 were unexplained and could be treated as unexplained cash credits under section 68. The Assessing Officer's detailed scrutiny of the bank statements showed cash withdrawals aggregating substantially in FY 2009-10 and a different pattern and timing of cash deposits in FY 2010-11. The assessee's explanation - that cash was withdrawn and held for a proposed property purchase through a real estate agent - was found to be implausible on multiple grounds: disproportionate quantum of withdrawals compared to the alleged required 50% of the consideration, unexplained further withdrawals despite already having the purported required cash in hand, failure to produce the agent or corroborative evidence, and inconsistent timing and specific denominations of subsequent deposits. The Tribunal, as final fact-finding authority, sustained the conclusion that the assessee failed to discharge the burden to satisfactorily explain the source of the cash deposits; the assessing authorities' inference of unaccounted income (and initiation of penalty proceedings) was supported by cogent reasoning. The Commissioner (Appeals) had, however, deleted an addition of Rs. 9,00,000/- noting the short gap between withdrawal on 03.03.2010 and deposit on 05.04.2010; the balance addition was sustained. The Court found no perversity or irrationality in these findings and declined to interfere. [Paras 5, 6, 7, 8, 9]

The addition treated as unexplained cash credits was upheld and the Tribunal's factual findings sustaining the addition were not interfered with.

Condonation of delay - Application for condonation of delay in filing the appeal - HELD THAT: - The appeal was delayed by 59 days and an application for condonation of delay was filed. The Court examined the matter on merits nonetheless but, having found the Tribunal's factual conclusions to be cogent and unimpeachable, declined to issue notice on the condonation application and was not inclined to condone the delay. [Paras 2, 10]

Application for condonation of delay rejected and appeal dismissed.

Final Conclusion: The Tribunal's factual findings upholding the addition of the unexplained cash deposits for AY 2011-12 are affirmed; the assessee failed to explain the source of deposits and the appeal and the condonation application are dismissed.

Qualifying ship within the meaning of Section 115VD - appeal under Section 260A - disallowance under Section 14A - application of Rule 8D as a best judgment determination - recording of satisfaction by the assessing officer before invoking Rule 8D - exempt income in the form of dividend

Qualifying ship within the meaning of Section 115VD - Whether a drilling rig is a qualifying ship within the meaning of Section 115VD of the Income Tax Act for the Assessment Years 2009-10 and 2010-11. - HELD THAT: - The court recorded that this issue is covered against the Revenue by the earlier decision of this Court in the respondent's favour and that an appeal from that decision is pending before the Supreme Court. Parties accepted that the Supreme Court's ruling would apply to the present appeals. Consequently, the first issue is treated as disposed of in terms of the statement on record, with liberty to the parties to file an application in these appeals if any difficulty arises after the Supreme Court's decision.

First issue disposed of in terms of the statement that the Supreme Court's decision in the pending appeal will apply; parties may file an application after that decision.

Disallowance under Section 14A - application of Rule 8D as a best judgment determination - recording of satisfaction by the assessing officer before invoking Rule 8D - exempt income in the form of dividend - Whether the Assessing Officer correctly invoked Rule 8D and made disallowances under Section 14A for the Assessment Years 2009-10 and 2010-11. - HELD THAT: - The Assessment Orders invoked Rule 8D as if it were mandatory and recorded little or no examination of whether the assessee's own computation of disallowance was justified. The Supreme Court in Godrej Boyce Manufacturing Company Limited held that Rule 8D prescribes a formula to be used as a best judgment determination only where the assessing officer records satisfaction that, having regard to the accounts placed before him, he cannot be satisfied about the correctness of the assessee's claim. That jurisdictional requirement of recorded satisfaction was not met in the present assessments. Therefore the Assessing Officer's mechanistic application of Rule 8D cannot be sustained.

No notice issued on this aspect; the Assessing Officer's invocation of Rule 8D without recording requisite satisfaction is unsustainable.

Final Conclusion: The appeals are disposed of: the question whether a drilling rig is a qualifying ship is treated as disposed of subject to the Supreme Court's decision in the pending appeal; the disallowances under Section 14A based on Rule 8D are found to have been made without the required recording of satisfaction and the Revenue's challenge on that score is not pressed further in these appeals; no order as to costs.

Penalty under section 271AAB - Conditions for 10% penalty under section 271AAB(1)(a) - Requirement of statement under section 132(4) - Specified date for filing return under section 153A - Residual clause for higher penalty under section 271AAB(1)(c) - Non-obstante clause and mandatory character of statutory conditions

Conditions for 10% penalty under section 271AAB(1)(a) - Requirement of statement under section 132(4) - Specified date for filing return under section 153A - Residual clause for higher penalty under section 271AAB(1)(c) - Non-obstante clause and mandatory character of statutory conditions - Whether penalty for AY 2013-14 was leviable under section 271AAB(1)(a) at 10% or under section 271AAB(1)(c) at 30% of the undisclosed income - HELD THAT: - The Tribunal found that the assessee admitted undisclosed income detected in a search but the admission was not made in a statement under section 132(4), the return in response to the notice under section 153A was filed well after the specified date and tax in respect of the undisclosed income was paid only after the specified date. The condition in clause (a)(iii) that tax be paid and return furnished on or before the specified date is mandatory and, in the factual matrix, was not satisfied. Clause (b) was likewise inapplicable. Section 271AAB begins with a non-obstante clause and prescribes distinct, cumulative conditions for benefit of the lower penalty rates; the Tribunal held that the CIT(A) was not entitled to import a discretionary 'reasonable cause' exception to read the assessee within clause (a). Consequently clauses (a) and (b) did not apply and the matter fell within the residuary provision of clause (c), attracting the higher penal rate. The Tribunal accordingly set aside the CIT(A)'s order reducing the penalty and restored the AO's penalty under clause (c). [Paras 4]

CIT(A)'s direction to levy penalty at 10% under section 271AAB(1)(a) reversed; AO's levy of penalty at 30% under section 271AAB(1)(c) for AY 2013-14 restored.

Penalty under section 271AAB - Disposal of assessee's cross objections supporting the CIT(A)'s order - HELD THAT: - The assessee's cross objections urged confirmation of the CIT(A)'s view that conditions for the 10% penalty were satisfied. Having found the CIT(A)'s factual and legal conclusion unsustainable in law, the Tribunal held that the cross objections lacked merit and dismissed them. [Paras 5, 6]

Cross objections dismissed.

Final Conclusion: The Tribunal allowed the Revenue appeal for AY 2013-14, set aside the CIT(A)'s order reducing the penalty to 10%, restored the Assessing Officer's penalty levied under section 271AAB(1)(c) at 30% of the undisclosed income, and dismissed the assessee's cross objections.

Condonation of delay - sufficient cause - substantial justice over technical considerations - cash deposits not automatically taxable as income from undisclosed sources - taxability of unexplained investments under section 69A - examination of bank account to verify source of funds

Condonation of delay - sufficient cause - substantial justice over technical considerations - Delay of 24 days in filing the appeal before the Tribunal was condoned and the appeal admitted for adjudication on merits. - HELD THAT: - The assessee filed an affidavit stating that medical treatment and bed rest prevented timely filing. Applying the settled principle that substantial justice should prevail over technicalities and that courts adopt a liberal view when explanations are bonafide (MST Katiji and relevant High Court/Tribunal precedents relied upon by the parties), the Tribunal found the medical reasons to constitute reasonable and sufficient cause. Having accepted the explanation and found no mala fide, the delay of 24 days was condoned and the appeal admitted for hearing on merits. [Paras 2]

Delay condoned; appeal admitted.

Cash deposits not automatically taxable as income from undisclosed sources - taxability of unexplained investments under section 69A - examination of bank account to verify source of funds - Addition of Rs. 11,87,500 made by the AO as income from undisclosed sources and upheld by the CIT(A) as unexplained investment under section 69A was deleted. - HELD THAT: - The AO treated certain cash deposits in the assessee's ICICI Bank account as income from undisclosed sources; the CIT(A) treated them as unexplained investments chargeable under section 69A. The assessee explained that the deposits formed part of retail saree business turnover and produced bank statements showing cash withdrawals of Rs. 29,94,500 in the relevant year. The Tribunal examined the bank account and found that total cash credits of Rs. 15,00,000 were substantially less than cash withdrawals, indicating that the deposits were redeposits from cash available on account of business exigencies rather than undisclosed income or investments. Revenue did not satisfactorily controvert this factual matrix. On these facts the Tribunal held that bank deposits cannot be automatically construed as taxable undisclosed income or unexplained investments under section 69A and that the addition was factually unsustainable; accordingly the addition was deleted and the AO directed to give effect to this order. [Paras 7, 8]

Addition deleted; appeal partly allowed on merits.

Final Conclusion: Application for condonation of 24 days' delay allowed and appeal admitted; on merits the Tribunal deleted the addition treated as income from undisclosed sources / unexplained investment (section 69A) after holding that bank deposits were satisfactorily explained as business turnover redeposited from cash withdrawals, and partly allowed the appeal for Assessment Year 2015-16.

Addition under section 68 (unexplained cash credit) - genuineness of creditors and creditworthiness - proof by bank statements, ledger entries and corroborative documentary evidence - estimation of income by adopting presumptive net profit rate - treatment of unpaid labour expenses as indicative of cash payments from undisclosed sources - precedent value of Tribunal's order in sister concern

Addition under section 68 (unexplained cash credit) - genuineness of creditors and creditworthiness - proof by bank statements, ledger entries and corroborative documentary evidence - Validity of additions made under section 68 in respect of loans/credits from various creditors, including confirmation of addition of Rs. 14 lakhs from Amit Handling Agency and deletion of additions in respect of other creditors. - HELD THAT: - The Tribunal examined documentary material and the statements on record. In respect of Amit Handling Agency (M. Mehta) the assessee's bank statements show deposits of cash by M. Mehta on the dates immediately preceding issuance of cheques to the assessee, and M. Mehta's statement recorded under oath confirmed giving three cheques which were deposited and cleared. On that basis the Tribunal upheld the finding that the credit from Amit Handling Agency was not satisfactorily explained and sustained the addition confirmed by the CIT(A). As to the other creditors, the assessee produced ledger accounts, bank statements, income tax return acknowledgements, cashbook entries and audited reports; the AO's remand report itself recorded that certain transactions appeared genuine. The mere non appearance of persons connected with those firms before the AO did not, in the Tribunal's view, negate documentary proof of genuineness or creditworthiness. Having regard to the material, the Tribunal found no reason to interfere with the CIT(A)'s deletions and upheld them. [Paras 8, 9]

Addition of Rs. 14 lakhs in respect of Amit Handling Agency upheld; deletions of additions in respect of the other creditors upheld.

Estimation of income by adopting presumptive net profit rate - treatment of unpaid labour expenses as indicative of cash payments from undisclosed sources - precedent value of Tribunal's order in sister concern - Validity and quantum of disallowance in respect of alleged inflated/bogus unpaid labour expenses and the correctness of restricting the addition by applying an adjusted net profit rate. - HELD THAT: - The AO made a large disallowance treating unpaid labour expenses as indicative of payments from undisclosed sources. The CIT(A), having regard to the Tribunal's approach in the assessee's sister concerns and the facts of the case, adjusted the net profit margin to 2% (from the assessee's figure) and restricted the addition to a smaller amount. The Tribunal observed that the AO had not established non genuineness by sample scrutiny and that unpaid expenses remaining outstanding for a period did not by itself negate genuineness; further, the AO's remand report did not conclusively disprove the genuineness of the expenditures. On these considerations and in view of the Tribunal's precedent in the sister concerns, the Tribunal found no infirmity in the CIT(A)'s approach and upheld the restriction of the addition. [Paras 15]

CIT(A)'s restriction of the addition by adopting an adjusted net profit rate and confining the disallowance to the amount upheld; both Revenue's and assessee's appeals on this ground dismissed.

Final Conclusion: Both appeals are dismissed: the addition of Rs. 14 lakhs in respect of Amit Handling Agency is sustained, the deletions of additions relating to other creditors are upheld, and the CIT(A)'s restriction of the labour expense related addition by adopting an adjusted net profit rate is affirmed.

Depreciation: plant and machinery versus building - Inclusive definition of plant in tax law - Allowable rate of depreciation for plant and machinery - Deduction under section 80IA(4)(i)(b) - infrastructure at ports - CBDT Circular No.10/2005 - certification by port authority as compliance

Depreciation: plant and machinery versus building - Inclusive definition of plant in tax law - Allowable rate of depreciation for plant and machinery - Storage tanks used by the assessee at Kandla Port Trust are plant and machinery and entitled to depreciation at the rate applicable to plant (15%) rather than as building (10%). - HELD THAT: - The Tribunal found the storage tanks were constructed to prescribed specifications, used for storage of highly explosive liquid cargo, licensed by the Chief Controller of Explosives and deployed in the assessee's business of hiring/storing liquid cargo at the port. Reliance was placed on coordinate bench decisions (including the assessee's own earlier ITAT decisions) and on High Court and Tribunal precedents holding that apparatus used in carrying on business for earning income qualifies as plant. Applying the inclusive concept of "plant," the Tribunal concluded the tanks are integral operational apparatus for the assessee's business and thus attract the depreciation rate applicable to plant and machinery; the AO's and CIT(A)'s classification as building was set aside and depreciation at 15% was directed to be allowed.

Allowed - depreciation on storage tanks to be treated as plant and machinery and allowed at 15%.

Deduction under section 80IA(4)(i)(b) - infrastructure at ports - CBDT Circular No.10/2005 - certification by port authority as compliance - Assessee's claim of deduction under section 80IA(4)(i)(b) for infrastructure (storage tanks, shore pipelines and related facilities) at leased port land is allowable where the port authority has certified those structures form part of port operations, and a specific executed agreement is not a prerequisite in the factual matrix. - HELD THAT: - The Tribunal accepted the assessee's evidence including the lease allotment, permissions from Kandla Port Trust and a certificate from KPT stating the structures form part of port operations for loading/unloading liquid cargo. Having regard to CBDT Circular No.10/2005, the sequence of approvals and communications with KPT and relevant precedents, the Tribunal held that the assessee had complied with the requirements of section 80IA(4)(i)(b) even in the absence of a separately executed agreement with the government authority; prior decisions were applied to infer compliance from the approvals and certificate, and the orders denying the deduction were set aside.

Allowed - deduction under section 80IA(4)(i)(b) in respect of the port infrastructure upheld.

Final Conclusion: The Tribunal allowed the assessee's appeals on the two principal issues: storage tanks at Kandla Port Trust were held to be plant and machinery attracting depreciation at 15%, and the assessee's claim for deduction under section 80IA(4)(i)(b) for port infrastructure was allowed on the facts and certificate/approvals from the port authority; related appeals for AYs 2006-07 and 2008-09 were allowed or partly allowed accordingly.

Disallowance of business expenses - wholly and exclusively for business - estimation of disallowance - remuneration to director - sec. 36(1)(ii) - unexplained cash credit - sec. 68 - onus to prove identity, genuineness and creditworthiness of lender - verification and remand to Assessing Officer - bogus purchases and gross profit addition

Disallowance of business expenses - wholly and exclusively for business - estimation of disallowance - Sustained 10% disallowance of miscellaneous expenses - HELD THAT: - The AO disallowed 20% of miscellaneous expenses because many payments were supported by self-made vouchers and certain records (log books) were not maintained; the CIT(A) reduced this to 10%. The Tribunal finds the AO's observations to be general and not pointing to any specific expense proved bogus, but also notes absence of log books/records which prevented conclusive proof of wholly and exclusive business nexus. In the circumstances the CIT(A)'s liberal reduction to 10% is justified and is upheld as a reasonable estimate in absence of irrefutable documentary disproof. [Paras 9]

Disallowance of 10% of miscellaneous expenses upheld.

Disallowance of business expenses - wholly and exclusively for business - estimation of disallowance - Modification of travelling expenses disallowance to 10% - HELD THAT: - The AO disallowed 50% of travelling expenses for lack of documentary proof of business nexus; the CIT(A) reduced it to 25%. The Tribunal accepts that the assessee failed to conclusively establish the business nexus as required, so some disallowance is warranted, but considers 25% excessive given the assessee's large turnover and the modest quantum of travel expenses. On balance and in view of the nature of the business and turnover, the Tribunal restricts the disallowance to 10% of travelling expenses. [Paras 11]

Disallowance of travelling expenses reduced to 10% (modified from 25%).

Remuneration to director - sec. 36(1)(ii) - wholly and exclusively for business - Remuneration of Rs. 36 lac to director held disallowable under sec. 36(1)(ii) - HELD THAT: - Section 36(1)(ii) prevents describing payments as bonus/commission where they effectively substitute profit/dividend to majority shareholder. The director was a 99.9% shareholder and the assessee failed to produce a board/AGM resolution or other material to show the payment was in accordance with terms of appointment or for services actually rendered. Absent such substantiation and given no similar payments in earlier years, the Tribunal concurs with lower authorities that the payment was in reality in the nature of distributable profit and rightly disallowed under section 36(1)(ii). [Paras 13, 14]

Disallowance of remuneration of Rs. 36 lac under sec. 36(1)(ii) upheld.

Unexplained cash credit - sec. 68 - verification and remand to Assessing Officer - Addition of Rs. 11,00,00,000 set aside for fresh verification (remanded) - HELD THAT: - The AO treated cheques totalling Rs.11 crore (dated 31.03.2012) claimed as loans from the director as unexplained cash credits because those amounts did not appear in bank statements of the parties and no reconciliation was provided. The assessee now explains these as notional/short lived entries which did not fructify and were reversed in the succeeding year. The Tribunal holds that such notional end of year mercantile entries, if truly not resulting in flow of funds, cannot be prima facie treated as unexplained cash credits without enquiry. Because this explanation was not presented to the AO for verification, the Tribunal restores the matter to the AO for verification of bank statements, confirmations and related facts; if the AO is satisfied the transaction did not involve actual flow of funds, no addition on this count shall be made. [Paras 16, 17, 20]

Addition of Rs. 11,00,00,000 set aside and remitted to AO for fresh verification; AO to examine bank records, lender's accounts and issued cheques and afford opportunity to assessee.

Unexplained cash credit - sec. 68 - onus to prove identity, genuineness and creditworthiness of lender - Deletion of addition of Rs. 3,17,12,458 under sec. 68 - HELD THAT: - The AO had characterised the Rs.3.17 crore loan advanced on 01.03.2012 as unexplained because the director had on same day received funds from M/s Dev Jewels and AO suspected the latter to be bogus. The Tribunal finds that the assessee placed on record audited accounts, returns and bank evidence of M/s Dev Jewels and that the concerned parties' assessments and CIT(A) decisions corroborate the genuineness and creditworthiness of Dev Jewels. Further, the proviso requiring explanation of 'source of source' became effective only from AY 2013 14; for AY 2012 13 the assessee was not under that obligation. Accordingly the Tribunal deletes the addition. [Paras 21, 22]

Addition of Rs. 3,17,12,458 as unexplained cash credit under sec. 68 deleted.

Unexplained cash credit - sec. 68 - verification and remand to Assessing Officer - Addition of Rs. 23,70,000 remanded to AO for fresh adjudication - HELD THAT: - The AO treated a loan of Rs.23.70 lakh from Mr. Deepak Kumar Kamboj as unexplained because corroborative documents (bank statement, returns) were not produced. The assessee had produced a confirmation containing PAN and residential details which the Tribunal finds to inspire some confidence but not fully discharge the heavy onus. In fairness, the Tribunal directs restoration to the AO to allow the assessee to produce requisite documentary evidence and for the AO to re adjudicate after affording opportunity of hearing. [Paras 23, 24]

Addition of Rs. 23,70,000 under sec. 68 set aside to AO for fresh adjudication; assessee to be afforded opportunity to substantiate.

Bogus purchases and gross profit addition - onus to prove identity, genuineness and creditworthiness of lender - Deletion of gross profit addition of Rs. 1,71,73,863 (and rejection of AO's finding of bogus sellers) - HELD THAT: - The AO made a large GP addition treating purchases from three parties as bogus on the basis that summonses were not complied with and addresses appeared residential, and because payments to the director were allegedly routed back. The Tribunal examines audited returns, bank statements and assessment orders of the counterparties (Dev Jewels, Arham Jewellery, Rajeshwari Impex), finds these parties' trading results and filings support their identity and business activity, notes that the AO accepted sales to these parties and that stock statements were verified without valuation discrepancies. A small quantum of alleged round tripping (circa Rs.3.17 crore) is insignificant relative to total purchases. In absence of irrefutable evidence of ingenuine transactions, the GP estimation is vacated and the CIT(A)'s substituted 2% estimation is also set aside; the addition is deleted. [Paras 25, 26, 29]

Gross profit addition of Rs. 1,71,73,863 deleted and AO's finding of bogus purchases vacated.

Bogus purchases and gross profit addition - Revenue's appeal against deletion of bogus purchases fails - HELD THAT: - Revenue challenged the CIT(A)'s substitution of AO's addition by a lesser amount. The Tribunal has deleted the substituted addition in entirety on merits for lack of irrefutable evidence that the sellers were bogus. Accordingly the revenue's ground fails. [Paras 31]

Revenue's appeal dismissed.

Final Conclusion: Assessee's appeal partly allowed: miscellaneous expenses disallowance upheld at 10%; travelling expenses disallowance reduced to 10%; director's remuneration disallowance under sec.36(1)(ii) upheld; gross profit addition/disallowance in respect of purchases deleted. Matters relating to certain sec.68 additions (Rs.11 crore and Rs.23.70 lakh) are remitted to the Assessing Officer for verification and fresh adjudication as directed. Revenue appeal dismissed.

Unexplained cash credit under section 68 - long term capital gains exemption under section 10(38) - suspicion cannot take the place of evidence - third party investigation material must be furnished to and confronted with the assessee and opportunity to rebut/cross examine - genuine share transactions supported by contract notes, demat statements and bank entries - addition as unexplained expenditure/commission linked to disallowed sale consideration

Unexplained cash credit under section 68 - long term capital gains exemption under section 10(38) - suspicion cannot take the place of evidence - genuine share transactions supported by contract notes, demat statements and bank entries - Addition of long term capital gain on sale of shares treated as unexplained cash credit was not justified - HELD THAT: - The Tribunal found that the Assessing Officer treated the LTCG as bogus on the basis of generalized findings, project reports and suspicion about market manipulation without bringing any specific evidence against the assessee. The assessee had produced contract notes, demat statements, bank statements showing payments/receipts through account payee instruments and evidence of STT payment. The AO relied on investigation reports and generalised modus operandi findings but did not furnish or confront the assessee with the underlying materials nor allow opportunity to rebut or cross examine. Applying settled law that suspicion, conjecture or project level generalisations cannot substitute for evidence, and relying on coordinate bench and High Court authorities to the same effect, the Tribunal held that in absence of positive material to controvert the documentary evidence produced by the assessee, the LTCG must be accepted as genuine and exempt under section 10(38); consequently the addition under section 68 was deleted.

Addition of long term capital gain treated as unexplained cash credit deleted and LTCG accepted as genuine and exempt.

Addition as unexplained expenditure/commission linked to disallowed sale consideration - unexplained cash credit under section 68 - Addition made towards unexplained commission expenditure consequential on treating sale consideration as bogus was not justified - HELD THAT: - Because the primary addition treating the sale consideration as bogus was deleted on the basis that the assessee's documentary evidence remained uncontroverted and the AO had not produced specific incriminating material, the consequential addition towards commission (computed as a percentage of the impugned sale proceeds) likewise had no foundation. The Tribunal therefore held that the commission addition must stand deleted as it arose only from the erroneous characterization of the sale consideration as unexplained.

Addition on account of unexplained commission deleted as consequential to deletion of the bogus LTCG addition.

Final Conclusion: The appeal is allowed: the Tribunal deleted the additions treating the long term capital gains as unexplained cash credit and the consequential commission addition, accepting the assessee's documentary evidence and holding that mere suspicion or unproduced investigation material cannot substitute for cogent evidence against the assessee.

Revisionary jurisdiction under section 263 - Error prejudicial to the interest of the revenue - Explanation 2 to section 263 and its limits - Requirement of inquiry/verification before invoking revisionary power - Burden under section 68 in respect of non-resident investor - Plausible view doctrine / scope of judicial review of Assessing Officer's satisfaction

Revisionary jurisdiction under section 263 - Error prejudicial to the interest of the revenue - Plausible view doctrine / scope of judicial review of Assessing Officer's satisfaction - Validity of the Pr.CIT's exercise of revisionary jurisdiction under section 263 on the ground that the Assessing Officer failed to make necessary enquiries about share capital and large share premium received from a Mauritius investor. - HELD THAT: - The Tribunal examined the material placed before the AO - including name and address of investor, copy of Form No.2 filed with ROC, share certificate, FIRC from remitting bank, FCGPR filed with RBI, RBI acknowledgement with DIN, Certificate of Incorporation of the investor, Tax Residency Certificate issued by Mauritius authorities and Chartered Accountant's certificate on fair market value - and held that those documents sufficiently established the identity of the investor, genuineness of the receipt through banking channels and justification for the premium. The Tribunal accepted that the AO was satisfied on the basis of these documents and that such satisfaction represented a plausible view warranting finality. The Pr.CIT's conclusion rested on general information (the White Paper) and suspicion that money routed from Mauritius may be tainted; the Tribunal held mere suspicion cannot substitute for material establishing error. The Commissioner cannot, under section 263, supplant a plausible satisfaction of the AO by merely expressing a different view without making independent inquiry; jurisdiction to revise requires a definite finding of error based on material and not conjecture. In these circumstances the Tribunal found the AO's enquiries adequate and set aside the revision order. [Paras 15, 16, 17, 18, 21]

Order of the Pr.CIT under section 263 set aside; AO's assessment held not erroneous or prejudicial to revenue.

Explanation 2 to section 263 and its limits - Requirement of inquiry/verification before invoking revisionary power - Whether Explanation 2 to section 263 empowers the Commissioner to revise an assessment merely by expressing that the AO's inquiry was inadequate without conducting further enquiry or verification. - HELD THAT: - The Tribunal held that Explanation 2 does not dispense with the requirement that the Commissioner must be satisfied of an error causing prejudice to revenue on the basis of material; it cannot be read to permit the Commissioner to assume jurisdiction by mere expression of disagreement with the AO. Reliance on general publications or background statistics, absent specific material regarding the particular investor or transaction, does not justify exercising revisionary jurisdiction. The Tribunal endorsed authorities holding that where detailed inquiries have been made by the AO and no specific infirmity is pointed out, Explanation 2 will not automatically render the order erroneous. [Paras 19]

Explanation 2 does not authorize the Commissioner to revise an order based on mere suspicion or without a definite finding of error after appropriate enquiry; the Pr.CIT's reliance on Explanation 2 was insufficient.

Burden under section 68 in respect of non-resident investor - Whether the AO was required to probe the 'source of the source' of funds invested by a non-resident investor for the purpose of section 68. - HELD THAT: - The Tribunal noted the amended statutory scheme in section 68 whereby, for sums credited in the books of an assessee-company, the additional burden to explain 'source of the source' arises in relation to credits recorded in the name of a resident. Where the investor is a non-resident, the assessee is not obliged to explain the source of the investor's funds beyond explaining the nature and source of the receipt. Given that the AO was satisfied from banking channel evidence, RBI/FIRC/FCGPR records and other documentary proof about genuineness, there was no legal requirement to investigate the remote source of the investor's funds. Consequently, the alleged failure to investigate 'source of source' did not render the assessment erroneous. [Paras 11, 20]

AO was not required to inquire into the source of the source in respect of a non-resident investor; absence of such inquiry did not make the assessment order erroneous.

Final Conclusion: The appeal is allowed: the Tribunal set aside the Pr.CIT's order under section 263, holding that the AO's enquiries into the FDI, identity of the Mauritius investor and justification for the share premium were adequate, Explanation 2 does not permit revision on mere suspicion without enquiry, and no obligation existed to probe the source of source where the investor was a non-resident.

Limitation for filing rectification under section 254(2) - rectification of an order for an apparent error - tax collected at source under section 206C(1C) - non applicability of proviso to section 206C(6A) to prior assessment years - distinction between collection under section 206C and deduction under section 206AA - remand to Assessing Officer to apply correct provisions of law

Limitation for filing rectification under section 254(2) - The rectification application filed by the Revenue on 22.01.2018 was within the six month period prescribed by the amended proviso to section 254(2) and therefore not barred by limitation. - HELD THAT: - The order sought to be rectified was passed on 03.08.2017. Under the amended provision the application had to be filed within six months from the end of the month in which the order was passed. The Revenue's initial filing on 22.01.2018 (although defective) was within that limitation period and defects were subsequently cured after communications dated 26.02.2018; consequently the assessee's objection on limitation was not sustainable and the application was maintainable. [Paras 2, 3]

Objection to maintainability on the ground of limitation is rejected and the rectification application is held to be within time.

Non applicability of proviso to section 206C(6A) to prior assessment years - tax collected at source under section 206C(1C) - distinction between collection under section 206C and deduction under section 206AA - rectification of an order for an apparent error - remand to Assessing Officer to apply correct provisions of law - The proviso to sub section (6A) of section 206C (inserted by Finance Act, 2012 with effect from 1 7 2012) was not applicable to the assessment year 2011 12; the order contained an apparent error which is liable to rectification and the matter is remitted to the Assessing Officer to apply the correct provisions. - HELD THAT: - The Co ordinate Bench had applied the proviso to section 206C(6A) in its order; however that proviso was introduced by Finance Act, 2012 and made effective from 1 July 2012. Since the assessment year in issue is 2011 12, the proviso does not apply. The Tribunal accepted the Revenue's submission that this was an inadvertent error apparent on the face of the record and amended the directions/observations in paragraph 11 (and consequentially paragraph 12) of the impugned order. The Tribunal also reiterated the legal distinction that section 206AA applies to persons entitled to receive income subject to deduction while section 206C deals with collection of tax by the person receiving amounts from contractors, and therefore directed remand to the Assessing Officer to apply the correct provisions of law to the matters under consideration. [Paras 5, 7, 8]

The proviso to section 206C(6A) is not applicable to AY 2011 12; the error is rectified, relevant directions in the impugned order are amended, and the issue(s) are remitted to the Assessing Officer to apply the correct statutory provisions.

Final Conclusion: Miscellaneous Applications filed by the Revenue are allowed: the limitation objection is rejected, the impugned order is rectified to remove the inapplicable proviso to section 206C(6A) for AY 2011 12, and the matter is remitted to the Assessing Officer for fresh consideration in accordance with the corrected legal position.

Revisionary jurisdiction under section 263 of the Income Tax Act - tax deduction at source under section 194J of the Income Tax Act - disallowance under section 40(a)(ia) of the Income Tax Act - substitution of opinion by revisional authority is impermissible where assessing officer has taken a possible view

Tax deduction at source under section 194J of the Income Tax Act - disallowance under section 40(a)(ia) of the Income Tax Act - Whether payment of Rs. 96,000 to Mahua Basu Mallick for translation of articles attracts withholding under section 194J and warrants disallowance under section 40(a)(ia). - HELD THAT: - The Tribunal held that the payment was for translation of articles from English to Bengali pursuant to dictation by the assessee and did not require professional skill such as would bring it within the ambit of section 194J. The assessee had produced bills, vouchers, bank statements and books of account which were examined by the assessing officer and reflected in the assessment order. On that basis the assessing officer took a possible view to accept the payment. Consequently, the payment could not be treated as subject to TDS under section 194J nor be disallowed under section 40(a)(ia). [Paras 5]

Payment for translation does not attract section 194J and is not liable to disallowance under section 40(a)(ia).

Revisionary jurisdiction under section 263 of the Income Tax Act - substitution of opinion by revisional authority is impermissible where assessing officer has taken a possible view - Whether the Principal Commissioner of Income Tax was justified in invoking revisionary jurisdiction under section 263 to set aside the assessment on the translation payment issue. - HELD THAT: - The Tribunal found that the assessing officer had examined the documents and taken a possible view accepting the returned income including the contested payment. The revisional authority, by substituting its own view and treating the assessment order as erroneous for want of inquiries it considered necessary, exceeded permissible exercise of section 263. Where the assessing officer has recorded a possible view after examining materials, revision under section 263 cannot be used merely to substitute the opinion of the revisional authority. [Paras 4, 5]

Revision under section 263 quashed insofar as it sought to re-open the assessing officer's view on the payment; the revisional proceedings were not justified.

Final Conclusion: The appeal is allowed: the payment of Rs. 96,000 for translation does not attract TDS under section 194J nor disallowance under section 40(a)(ia), and the action under section 263 setting aside the assessment is quashed as an impermissible substitution of opinion.

Admission of fresh evidence on appeal - principles of natural justice - compliance with Rule 5 of the Customs (Appeals) Rules, 1982 - remand for fresh consideration - customs valuation-application of Rule 12(1) and reassessment under Rule 5 of the Customs Valuation Rules

Admission of fresh evidence on appeal - principles of natural justice - compliance with Rule 5 of the Customs (Appeals) Rules, 1982 - Whether the Commissioner (Appeals) could rely upon and act on a certificate produced before him for the first time without giving the Department an opportunity to examine or rebut it, in the context of valuation proceedings - HELD THAT: - The Tribunal found that the Commissioner (Appeals) relied on a certificate from the Department of Polymer Science & Rubber Technology and a supplier's certificate produced before the Commissioner (Appeals) but not before the adjudicating authority. Rule 5 of the Customs (Appeals) Rules, 1982 restricts production of evidence before the Commissioner (Appeals) and requires that evidence permitted to be produced must be made available to the adjudicating authority or its authorised officer with a reasonable opportunity to examine and to produce rebuttal evidence. The Commissioner (Appeals) set aside the Order-in-Original on the basis of that certificate without affording the Department any opportunity to controvert the findings or to test the provenance and testing of the sample. That procedure violated the principles of natural justice and the specific safeguard in Rule 5(3), rendering the impugned order unsustainable in law. [Paras 3]

Findings recorded by the Commissioner (Appeals) based on evidence produced for the first time before him without giving the Department an opportunity to examine or rebut the same are in violation of Rule 5 and principles of natural justice; the impugned order is not sustainable and is set aside.

Remand for fresh consideration - customs valuation-application of Rule 12(1) and reassessment under Rule 5 of the Customs Valuation Rules - Disposition of the matter after finding procedural infirmity in the appellate decision - HELD THAT: - Given the procedural defect in admitting and acting upon the fresh evidence without affording the Department an opportunity to examine or rebut it, the Tribunal did not adjudicate the valuation merit on the basis of that evidence. Instead, the Tribunal set aside the impugned order and remanded the case to the Commissioner (Appeals) for passing a fresh order. On remand the Commissioner (Appeals) is to afford the Department a reasonable opportunity to controvert the evidence produced before the Commissioner (Appeals) and to deal with valuation under the Customs Valuation Rules, including consideration of documents and tests in accordance with Rule 12(1) and the appellate rules. [Paras 3]

Case remanded to the Commissioner (Appeals) to pass a fresh order after affording the Department a reasonable opportunity to examine and controvert the evidence produced before the Commissioner (Appeals); appeal allowed by way of remand.

Final Conclusion: The impugned order of the Commissioner (Appeals) was set aside for breach of Rule 5 and principles of natural justice; the matter is remitted to the Commissioner (Appeals) to rehear and decide afresh after giving the Department a reasonable opportunity to examine and rebut the evidence relied upon on appeal.

Transaction value - Re-determination of value - Rule 7A of CVR, 1988 - Custom Valuation Rules, 1988 - Related persons/relatedness - Customs House Laboratory test report - Confiscation under Section 111(m) of the Customs Act, 1962 - Penalty and redemption fine

Transaction value - Re-determination of value - Rule 7A of CVR, 1988 - Related persons/relatedness - Custom Valuation Rules, 1988 - Customs House Laboratory test report - Transaction value declared by the importer was rejected and customs value was re-determined under Rule 7A of the Custom Valuation Rules, 1988. - HELD THAT: - The Tribunal accepted the Commissioner's finding that the declared unit price was lower than the value of the raw material and that there was a discrepancy in declared quantity on physical examination. The importer being the sole distributor was treated as a related person for purposes of valuation, precluding acceptance of transaction value and requiring sequential consideration of Rules 5-8 of the CVR. The Commissioner gave reasons why Rules 5-7 could not be applied and proceeded under Rule 7A to re-determine value. The Customs House Laboratory report showing material composition different from that declared reinforced the reason to disbelieve the declared value. On these facts the Tribunal found no infirmity in rejecting the transaction value and in re-determination under Rule 7A. [Paras 5]

Rejection of the declared transaction value and re-determination of customs value under Rule 7A upheld.

Confiscation under Section 111(m) of the Customs Act, 1962 - Penalty and redemption fine - Adjudication including confiscation, demand of differential duty, imposition of penalty, recovery of testing charges, and redemption fine was maintained. - HELD THAT: - The appellants contended that confiscation under Section 111(m) was improper and challenged the penalties and other consequential orders. Having upheld the conclusion that the declared value and quantity were incorrect and that re-determination under Rule 7A was justified, the Tribunal found the consequential demand, penalties, testing charges, redemption fine and appropriation of bank guarantees to follow from the upheld re-determination and the findings of mis-declaration. The Tribunal did not find merit in the appellants' submissions and declined to disturb the punitive and consequential measures imposed by the Commissioner. [Paras 3, 5, 6]

Confiscation, demand, penalties, testing charges, redemption fine and appropriation of bank guarantees confirmed.

Final Conclusion: The impugned Order in Original rejecting the declared transaction value, re determining customs value under Rule 7A of the CVR, 1988, and confirming consequential demand, confiscation and penalties is upheld; the appeal is dismissed.

Alternative remedy - Extraordinary jurisdiction under Article 226 - Exceptions to alternative remedy (ultra vires, violation of principles of natural justice, infringement of fundamental rights) - Limitation as mixed question of fact and law - Interpretation of fiscal statutes is within competence of statutory forums and tribunals - Statutory appellate mechanism and CESTAT as efficacious remedy - Section 130 Customs Act - substantial question of law to be referred to Division Bench

Alternative remedy - Extraordinary jurisdiction under Article 226 - Limitation as mixed question of fact and law - Interpretation of fiscal statutes is within competence of statutory forums and tribunals - Whether the Electricity Board (W.P.(C) No.11302/2018) had an efficacious alternative remedy and whether exceptional grounds justified invocation of Article 226 to challenge the service-tax assessment (including limitation and interpretation contentions). - HELD THAT: - The Court held that limitation is a mixed question of fact and law unsuited to summary adjudication under Article 226 and that intricate interpretation of statutory provisions does not, by itself, render the statutory forum inadequate. The petitioners did not contend that the authorities acted ultra vires or violated fundamental rights or principles of natural justice. The existence of common issues across multiple units and inconvenience or multiplicity of proceedings do not constitute exceptional grounds to bypass the statutory appellate machinery. Accordingly, the statutory remedies under the Finance Act (including appeal to the prescribed authorities and tribunal) amount to efficacious alternative remedies and there were no exceptional circumstances to warrant exercise of extraordinary writ jurisdiction. [Paras 36, 38, 39, 40]

The Electricity Board failed to establish exceptional grounds; efficacious alternative remedies are available; relief under Article 226 is refused.

Alternative remedy - Statutory appellate mechanism and CESTAT as efficacious remedy - Limitation as mixed question of fact and law - Whether the petitioner in W.P.(C) No.24129/2018, whose appeal was dismissed by the Appellate Commissioner as barred by limitation, could invoke Article 226 instead of approaching CESTAT. - HELD THAT: - The appellate authority dismissed the departmental appeal as time barred; the proper recourse was to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The petitioner did not demonstrate any exceptional circumstance to displace the statutory appellate route. The Court therefore declined to entertain the writ petition and directed that the statutory remedy before CESTAT was available and efficacious. [Paras 41]

The petitioner failed to establish grounds to bypass the statutory appeal to CESTAT; writ petition dismissed on that basis.

Alternative remedy - Section 130 Customs Act - substantial question of law to Division Bench - Proper forum for challenge under Customs Act - Whether the petitioner in W.P.(C) No.68/2018 could challenge the CESTAT order under Article 226 instead of invoking the remedy under Section 130 of the Customs Act. - HELD THAT: - The petition concerned declaration of baggage contents and allegations of concealment; after adverse orders at appellate levels, the petitioner invoked Article 226. The Court held that the petitioner approached the wrong provision: challenges arising under the Customs Act should, where appropriate, be prosecuted under Section 130 when a substantial question of law arises and is required to be heard by a Division Bench. The statutory route, not Article 226, was the proper forum for adjudication of the dispute. [Paras 42, 43]

The petitioner invoked an incorrect remedy; the statutory provision (Section 130) and appellate mechanism must be followed; writ petition not entertained.

Final Conclusion: All three writ petitions are dismissed for failure to demonstrate exceptional circumstances to bypass efficacious statutory remedies; the petitioners must pursue the prescribed appellate remedies. No order as to costs.

Export of service - completion of service - relevant date for refund under Section 11B - limitation for refund claim - advance payment versus date of completion - determination of date of export by contractual terms - single adjudication principle for refund claims

Export of service - completion of service - relevant date for refund under Section 11B - advance payment versus date of completion - limitation for refund claim - Whether the refund application was filed within the period of limitation by reference to the relevant date for export of service - HELD THAT: - The Tribunal held that an export of service is completed only when both (a) the service is provided from India and received outside India and (b) payment is received in India in convertible foreign exchange. Both conditions must be satisfied to treat a service as an export. The service in question, covering April-June 2012, was held to be completed on 30 June 2012; the amount received on 30 April 2012 was an advance and cannot be treated as the relevant date for completion. Accordingly, the relevant date for reckoning the one year limitation under Section 11B is the date of completion of the service (30 June 2012) and not the earlier advance receipt. Applying this principle, the Tribunal upheld the conclusion that the refund claim was within limitation as determined by the appellate authority. [Paras 7]

The relevant date for the refund claim is the date of completion of the service (30 June 2012); the advance receipt on 30 April 2012 does not commence limitation.

Determination of date of export by contractual terms - single adjudication principle for refund claims - Whether the Commissioner (Appeals) erred in relying on the parties' service agreement to determine the relevant date and in allowing the refund without adjudicating other grounds previously raised by Revenue - HELD THAT: - The Tribunal accepted the appellate authority's reliance on the contractual clause establishing that services for the quarter are construed executed in full on the last day of the quarter, thereby supporting the date of completion finding. Further, the Tribunal rejected Revenue's contention that other grounds for rejecting the refund could be raised after the Commissioner (Original) had rejected the claim on limitation grounds. The Court held that it is impermissible for Revenue to reject a refund on one ground and, if that ground is found unsustainable on appeal, then raise other grounds; there cannot be more than one show cause notice and one adjudication for the same refund claim. The challenge that the Commissioner (Appeals) did not examine all conditions of Notification No. 5/2006-CE was held to be frivolous and contrary to public policy and the statutory scheme. [Paras 8]

Reliance on the contractually stipulated date of completion was permissible for determining the relevant date; Revenue cannot reopen alternative grounds for rejection after the initial limitation based adjudication has been set aside.

Final Conclusion: The appeal by Revenue is rejected; the order of the Commissioner (Appeals) allowing the refund is upheld and the adjudicating authority is directed to grant the refund with interest within 45 days of receipt of this order.

Refund of service tax paid on reverse charge basis - Unjust enrichment - Burden to establish absence of unjust enrichment - Remand for fresh consideration

Refund of service tax paid on reverse charge basis - Unjust enrichment - Burden to establish absence of unjust enrichment - Claim for refund of service tax paid on reverse charge basis was remanded for fresh adjudication to permit the appellant to prove that the incidence of tax was not passed on to any other person. - HELD THAT: - The Tribunal examined the record and found that the appellant had not produced before the original authority the necessary documents to establish absence of unjust enrichment. Before the Commissioner (Appeals) the appellant furnished only a balance sheet and a CA certificate for 2007-08, without supporting ledgers, schedules or contemporaneous documents from the period when the services were received (1997-2002). The Tribunal held that documents for 2007-08 are not sufficient to determine whether the incidence of the service tax paid during July, 1997 to August, 2002 was passed on. In view of the absence of requisite evidence and in the interests of justice, the matter was set aside and remanded to the adjudicating authority with liberty to the appellant to produce all necessary documents to satisfy the sanctioning authority regarding unjust enrichment, and for the authority to pass a fresh order in accordance with law. [Paras 4, 5]

Impugned order set aside and appeal allowed by way of remand to the adjudicating authority to decide the refund claim after permitting the appellant to produce necessary documents to establish non-passage of incidence.

Final Conclusion: The appeal is allowed by way of remand: the adjudicating authority is directed to reconsider the refund claim for service tax paid on reverse charge basis (for the period July, 1997 to August, 2002, i.e., prior to 18.04.2006) after permitting the appellant to produce all relevant documents to discharge the burden of proving absence of unjust enrichment and then pass a fresh order in accordance with law.

Composite works contract - works contract service (classification under Section 65(105)(zzzza)) - service simpliciter - construction of residential complex service - commercial or industrial construction service - non-levy of service tax prior to 01.06.2007 on composite contracts - classification principle under Section 65A (specific description preferred)

Composite works contract - non-levy of service tax prior to 01.06.2007 on composite contracts - Larsen & Toubro ratio - Leviability of service tax on composite works contracts for the period prior to 1.6.2007 - HELD THAT: - Relying on the ratio in Larsen & Toubro and this Bench's earlier reasoning, the Tribunal held that where construction activity is in the nature of a composite works contract (involving both supply/transfer of property in goods and services), such contracts could not be subjected to service tax prior to 01.06.2007. The appellate bench observed that the charging provisions and valuation provisions then in force applied to services simpliciter and did not permit vivisection of composite contracts to extract a taxable service portion before 01.06.2007. Consequently, demands framed under construction service entries for periods prior to 01.06.2007 cannot be sustained in respect of composite works contracts. [Paras 7, 8]

Service tax demand under construction service entries for composite works contracts for the period prior to 01.06.2007 set aside.

Works contract service (classification under Section 65(105)(zzzza)) - service simpliciter - construction of residential complex service - commercial or industrial construction service - classification principle under Section 65A (specific description preferred) - Appropriate classification and levy for composite works contracts for the period after 1.6.2007 - HELD THAT: - The Tribunal held that from 01.06.2007 composite contracts fall within the specifically introduced category of "Works Contract Service" and that only contracts which are services simpliciter (without supply of goods) can be taxed under entries such as Commercial or Industrial Construction Service or Construction of Complex Service. The bench relied on the legislative intent (including the 2007 budget speech and CBEC guidance) and prior decisions to conclude that on-going indivisible composite contracts remain works contracts and must be treated and taxed accordingly; they cannot be reclassified as CICS/CCS/RCS merely because part of the activity is construction. Therefore, where the contract is an indivisible composite works contract, service tax liability after 01.06.2007 should be under the works contract entry and not under CICS/CCS/RCS unless the activity is service simpliciter. [Paras 7, 8]

Composite indivisible contracts executed after 01.06.2007 are exigible under Works Contract Service; demands under CICS/CCS/RCS for such composite contracts cannot be sustained unless the activity is service simpliciter.

Show cause notices proposing demand under CICS/CCS for composite contracts - non-sustainability of demand - Sustainability of the impugned show cause notices and orders demanding service tax under CICS/CCS/RCS in the present appeals - HELD THAT: - Applying the conclusions on classification and the non-levy prior to 01.06.2007, the Tribunal found that the show cause notices and the impugned orders which proposed and confirmed service tax liability under Commercial or Industrial Construction Service or Construction of Complex Service for the periods in dispute could not be sustained insofar as they related to composite works contracts. The Tribunal noted no contrary binding decision was placed before it and therefore set aside the impugned orders in the appeals. [Paras 7, 8]

Impugned orders and demands framed under CICS/CCS/RCS in respect of composite works contracts for the periods in dispute are set aside.

Final Conclusion: The appeals are allowed: demands and orders holding the appellant liable to service tax under construction service entries for composite works contracts for the periods March 2006 to June 2010 (as framed in the show cause notices) are set aside; composite indivisible contracts prior to 01.06.2007 are not exigible to service tax and, post 01.06.2007, such contracts attract tax under Works Contract Service and not under CICS/CCS/RCS unless they are services simpliciter; consequential benefits, if any, to be given as per law.

Valuation under rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Inapplicability of rule 11 read with rule 6 where related parties transact under a conversion/principal-to-principal arrangement - Treatment of by-product/slag and inclusion of raw material cost in assessable value - Valuation of transfers between related units and proviso to rule 9

Valuation under rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Inapplicability of rule 11 read with rule 6 where related parties transact under a conversion/principal-to-principal arrangement - Applicability of rule 8 (instead of rule 11 read with rule 6) to determine assessable value where respondent (a related entity) carried out manufacture under a conversion agreement with the principal and charged a stipulated conversion consideration. - HELD THAT: - The Tribunal found that the respondent, though acting as an independent and specialised manufacturer, entered into a conversion agreement with its parent (related) company under which conversion consideration was contractually fixed rather than market-determined. Such contractual, principal-to-principal arrangements fall within the special valuation regime contemplated by rule 8. Rules 11 and 6 are intended to govern valuation for clearances in the ordinary course to independent buyers; they are not apposite where related parties have agreed a conversion/transfer under the relationship present here. The Board's guidance cited by Revenue and other circulars dealing with job-work and captively consumed goods were considered in this factual matrix, but the Tribunal concluded that the proviso to rule 9 and rule 8 properly govern valuation of transfers between related units or sister units which do not involve independent market sales.

Valuation was correctly governed by rule 8; rule 11 read with rule 6 was inapplicable in the present principal-to-principal conversion arrangement.

Treatment of by-product/slag and inclusion of raw material cost in assessable value - Valuation of transfers between related units and proviso to rule 9 - Whether retention and clearance of by-product ('slag') by the respondent amounted to additional consideration not included in assessable value and whether the computation under rule 8 excluded any includable element. - HELD THAT: - The Tribunal accepted the factual finding that the cost of raw materials subsumed in the slag had been included in the computation under rule 8. It observed that slag was a remnant of the manufacturing process and not a distinct omitted element; accordingly, there was no omission of includable consideration in the assessable value determined under rule 8. The adjudicating authority's approach in treating the value as incorporating the cost subsumed in slag was therefore held to be proper and consistent with the proviso to rule 9 where applicable.

Retention/clearance of slag did not constitute an excluded additional consideration; the value computed under rule 8 appropriately included the cost subsumed in the slag.

Final Conclusion: The Tribunal dismissed Revenue's appeal, holding that valuation in these related-party conversion transactions was correctly governed by rule 8 (with proviso to rule 9 where relevant) and that the assessable value as computed included the cost subsumed in the by-product (slag), leaving no merit in the demand raised in the show cause notices.

Exemption under Central Excise Notification No.6/2006-CE subject to conditions of Customs exemption - applicability of conditions of Customs Notification to a domestic manufacturer - verification of post-facto certificates to establish end-use - scope of remand and limits of de novo adjudication - setting aside erroneous recovery of sanctioned refunds

Scope of remand and limits of de novo adjudication - verification of post-facto certificates to establish end-use - Whether the adjudicating authority exceeded the narrow remand made by the Tribunal and conducted impermissible de novo scrutiny beyond verification of certificates. - HELD THAT: - The Tribunal's earlier final order remitted the matter to the adjudicating authority only to verify whether the certificates produced subsequently met the requirements of the notification and to extend exemption where necessary certificates were produced. The adjudicating authority went beyond that limited remit by re-examining various extraneous aspects, including insisting that certificates must have been submitted at the time of clearance, questioning the appellant's status as sub-contractor despite documentary project authority certificate, and treating minor deficiencies in documents as incurable. The Tribunal finds such expanded inquiry to be beyond the scope of its remand and, having so concluded, holds that the impugned adjudication cannot be sustained to the extent it prosecutes a wider re-appraisal instead of carrying out the directed verification. [Paras 6]

Impugned adjudication set aside insofar as it exceeded the limited verification remand; appeal allowed.

Applicability of conditions of Customs Notification to a domestic manufacturer - exemption under Central Excise Notification No.6/2006-CE subject to conditions of Customs exemption - Whether conditions of Customs Notification No.21/2002-Cus. (as adapted) must be satisfied by a domestic manufacturer claiming exemption under Notification No.6/2006-CE. - HELD THAT: - The Tribunal relied on the decision of the Hon'ble Bombay High Court which held that conditions in the Customs notification are directed at importers and need not be satisfied by a domestic manufacturer; a domestic manufacturer claiming excise exemption need only satisfy the condition that supplies are made under international competitive bidding, etc., applicable to domestic supplies. Applying that ratio, the Tribunal concluded that the foundational premise of the department's proceedings (that domestic suppliers must comply with all customs conditions) is unsustainable and therefore the orders premised on that view collapse. [Paras 6, 7, 8]

Held that conditions in the Customs notification are not required to be satisfied by a domestic manufacturer for claiming exemption under Notification No.6/2006-CE; impugned order based on contrary premise fails.

Setting aside erroneous recovery of sanctioned refunds - exemption under Central Excise Notification No.6/2006-CE subject to conditions of Customs exemption - Whether recovery proceedings against refunds sanctioned to the appellant in respect of clearances under Notification No.6/2006-CE could be sustained. - HELD THAT: - The refunds sanctioned by the original authorities in respect of clearances claiming Notification No.6/2006-CE were subsequently treated as erroneous and sought to be recovered on the premise that the exemption was not available. Having found that the departmental premise (necessity for manufacturers to satisfy customs conditions) is incorrect and that the remand was limited to verification of certificates, the Tribunal held that the orders purporting to recover those refunds cannot be sustained. Consequently, the Tribunal set aside the impugned recovery orders and allowed the related appeals. [Paras 8]

Orders seeking recovery of the sanctioned refunds set aside; appeals allowed with consequential benefits.

Final Conclusion: The Tribunal set aside the impugned adjudication insofar as it exceeded the limited remand, applied the Bombay High Court's ratio that customs-notification conditions do not bind a domestic manufacturer claiming excise exemption under Notification No.6/2006-CE, and consequently quashed the orders recovering refunds; the appeals are allowed with consequential reliefs as per law.

Valuation of physician samples manufactured on job-work basis - valuation under Section 4 (transaction value) for job-work clearances - pro rata valuation under Section 4A for trade packs - cost of raw materials plus job charges (cost-plus valuation) - precedential application of Ujagar Prints

Valuation of physician samples manufactured on job-work basis - valuation under Section 4 (transaction value) for job-work clearances - pro rata valuation under Section 4A for trade packs - cost of raw materials plus job charges (cost-plus valuation) - precedential application of Ujagar Prints - Physician samples manufactured on job-work basis and cleared to the principal must be valued on the basis of cost of raw materials plus job charges and not on pro rata value under Section 4A of trade packs. - HELD THAT: - The Tribunal, following the binding ratio laid down in Ujagar Prints and subsequent decisions of this Tribunal and other authorities, held that where medicament physician samples are manufactured on job-work basis and cleared to the principal, valuation must be determined by reference to the cost of raw materials plus job charges. The Revenue's proposal to apply a pro rata valuation under the trade-pack methodology of Section 4A was rejected as incorrect and not legally sustainable in the facts of such job-work clearances. The Tribunal set aside the impugned order and allowed the appeal, applying the established precedent that cost-plus valuation governs job-work manufactured physician samples.

Impugned order set aside; valuation to be on cost of raw materials plus job charges as per the precedent; pro rata Section 4A valuation for trade packs not applicable.

Final Conclusion: The appeal is allowed; the Tribunal applies the precedent in Ujagar Prints to hold that physician samples manufactured on job-work basis and cleared to the principal are to be valued at cost of raw materials plus job charges, and not on a pro rata Section 4A trade-pack basis; the impugned order is set aside.

CENVAT credit eligibility - input services - connection to manufacture of final product - onus on assessee to prove use of services - remand for fresh adjudication - scope of remand - adjudicating authority to decide on doubts in show cause notice

Onus on assessee to prove use of services - CENVAT credit eligibility - connection to manufacture of final product - Assessee's obligation to place factual material showing that impugned services were used in relation to manufacture before claiming CENVAT credit. - HELD THAT: - The Tribunal observed that when a statutory notice casts doubt on whether services were used in relation to manufacture of the final product, the primary duty lies on the assessee to first place facts on record demonstrating how and where the services were utilized and then address legal entitlement with supporting precedents. The adjudicating authorities and courts consistently examine facts first and then rule on eligibility; consequently, an assessee relying mainly on case-law without furnishing the underlying factual matrix fails to meet this threshold. Given the appellant's replies, the Tribunal found that the factual material required to satisfy the initial question of use was not furnished here and that the First Appellate Authority rightly directed verification of eligibility in light of that deficiency. [Paras 5, 6]

Assessee failed to discharge primary onus of placing requisite facts to establish that the impugned services were used in relation to manufacture; lack of factual foundation justified further scrutiny.

Remand for fresh adjudication - scope of remand - adjudicating authority to decide on doubts in show cause notice - Validity and scope of the remand by Commissioner (Appeals) and directions for fresh adjudication. - HELD THAT: - The Tribunal sustained the remand by the Commissioner (Appeals) but modified the appellate directions. It directed that the adjudicating authority should not be influenced by the findings or directions of the Commissioner (Appeals) and should confine itself to addressing the specific doubts articulated in the Show Cause Notices, conducting fresh adjudication in accordance with law. The appellant was directed to place all relevant factual material on record to enable fair adjudication. [Paras 7]

Remand upheld but modified: adjudicating authority to conduct fresh adjudication limited to doubts in the SCN, uninfluenced by appellate findings, after the assessee furnishes necessary facts.

Final Conclusion: Appeal dismissed; remand to the adjudicating authority sustained but confined to resolving the doubts raised in the Show Cause Notices, with directions that the assessee must first place factual material establishing use of the impugned services before entitlement to CENVAT credit is adjudicated.

CENVAT credit on inputs and input services - inputs used in job worked goods supplied to principal manufacturer - combo package assessable value including cost of free promotional item - trading activity versus manufacture with job work - requirement to maintain separate accounts under Rule 6 of the CENVAT Credit Rules, 2004

CENVAT credit on inputs and input services - inputs used in job worked goods supplied to principal manufacturer - combo package assessable value including cost of free promotional item - Eligibility of CENVAT credit on inputs and input services used for manufacture of Tawa which was supplied to the assessee by a job worker and cleared as a free item in a combo package with the pressure cooker. - HELD THAT: - The appellant supplied raw materials to a job worker who manufactured the Tawa and discharged duty on the Tawa; the job work charges and the cost (including duty) of the Tawa were incorporated into the assessable value of the pressure cooker cleared as a combo package. The Tribunal applied the Modvat/CENVAT principle that input costs which enter into the final product sold (directly or indirectly) are eligible for set off so that only value addition is ultimately taxed. The supply of job worked goods to the principal manufacturer and subsequent clearance as part of a promotional combo does not convert the activity into non manufacturing for the purpose of input credit where the cost of such items is absorbed in the assessable value of the final product. Relying on precedents treating items supplied along with the final product for promotion as inputs, the Tribunal held that credit availed on inputs/input services used for manufacture of the Tawa was rightly taken by the appellant. [Paras 6, 8, 9, 10]

CENVAT credit availed on inputs and input services used for manufacture of the Tawa is admissible and was correctly availed by the appellant.

Trading activity versus manufacture with job work - requirement to maintain separate accounts under Rule 6 of the CENVAT Credit Rules, 2004 - Whether the clearance of Tawa by the appellant as a free item in the combo package amounted to trading activity thereby mandating maintenance of separate accounts under Rule 6 and disallowing common credit. - HELD THAT: - The Department characterised the supply of Tawa as trading because Tawa was cleared without separate MRP and thereafter supplied to customers. The Tribunal found no substance in that characterisation: the Tawa was manufactured by a job worker from inputs supplied by the appellant, the duty on the Tawa was paid, and the costs were absorbed in the assessable value of the pressure cooker cleared in the combo package. Given that the activity was manufacture (via job work) and the promotional supply was integrated into the final product's assessable value, it could not be treated as pure trading requiring bifurcation of credits. Consequently, the obligation to maintain separate accounts under Rule 6 did not arise for denying the common credit. [Paras 7, 8, 10]

Clearance of the Tawa as part of the combo package was not trading activity; separate accounts under Rule 6 were not required for denial of common credit.

Final Conclusion: The impugned demand and penalties are set aside; the appeal is allowed and the CENVAT credit on inputs and input services used for the manufacture of the Tawa (supplied by job worker and cleared as part of the promotional combo) is confirmed as admissible, with consequential reliefs as per law.

Eligibility of CENVAT credit for goods used in support structures - scope of CENVAT Credit Rules and Rule 2(a) - distinction between capital goods and inputs - requirement of registration/amendment for claiming CENVAT credit - precedential effect of High Court and Tribunal decisions on credit eligibility

Eligibility of CENVAT credit for goods used in support structures - distinction between capital goods and inputs - precedential effect of High Court and Tribunal decisions on credit eligibility - CENVAT credit availed on MS angles, channels, HR plates, signal cables and seamless pipes used as supporting structures is eligible and cannot be disallowed as ineligible capital goods. - HELD THAT: - The Tribunal held that MS angles, channels and similar items used for fabrication of support structures and operational platforms are integrally connected to the manufacturing activity and therefore eligible for credit. The bench relied on the ratio of this Tribunal in Commissioner of G.S.T. & Central Excise, Trichy Vs. M/s. Shree Ambika Sugars Ltd. which followed the jurisdictional High Court in M/s. Thiru Arooran Sugars Vs. CESTAT, Chennai and noted the distinction from cases concerning inputs used to provide output services or items that, after fabrication, become immovable property in a manner that severs nexus with manufacture. The Tribunal also observed that earlier precedents such as Vandana Global Ltd. were considered and distinguished on facts where attachment to earth rendered goods immovable. Applying these authorities, the Tribunal concluded that the impugned items, used as support structures essential for manufacturing operations, cannot be treated as ineligible capital goods for denial of CENVAT credit. [Paras 6, 7]

Credit on the impugned items is eligible and cannot be denied on the ground that they are capital goods not covered by tariff entries.

Requirement of registration/amendment for claiming CENVAT credit - scope of CENVAT Credit Rules and Rule 2(a) - Non-amendment of registration to reflect a new unit (or alleged non-registration of ISD) is not a valid ground, by itself, to deny CENVAT credit where the revenue does not dispute the existence of the unit or the nexus of goods to the manufacturing activity. - HELD THAT: - The adjudicating authority relied on Rule 2(a) of the CENVAT Credit Rules to contend that credit was ineligible because the goods were intended for use at a new unit and the registration certificate had not been amended. The Tribunal rejected this basis for denial, noting that the CENVAT rules do not confine use of inputs or input services strictly to the originally registered manufacturing unit and that the Revenue did not contest the existence of the new unit. Relying on the decision of the High Court in Commissioner of C. Ex., Bangalore-I Vs. ECOF Industries Pvt. Ltd. and the consistent line of decisions addressed by this Bench, the Tribunal held that absence of a separate registration/amendment cannot, ipso facto, defeat credit eligibility. [Paras 5, 6, 9]

Denial of credit solely on account of non-amendment of registration or non-registration of ISD is unsustainable where the unit and nexus are not otherwise disputed.

Final Conclusion: The Tribunal set aside the impugned appellate order, allowed the appeal, held the CENVAT credit on the specified items to be eligible, and found the remand/denial based on non-amendment of registration to be unsustainable; the appeal is allowed with consequential benefits as per law.

Cenvat credit of input services - job-worker as manufacturer - service tax on GTA services - interpretation of input service definition - assessment limitation - normal period - penalty for wrongful availment of credit

Cenvat credit of input services - job-worker as manufacturer - service tax on GTA services - Entitlement of the appellant to take Cenvat credit of service tax paid on GTA services for transport of inputs to the job-worker and transport of finished goods from the job-worker when manufacturing and payment of excise duty were performed by the job-worker. - HELD THAT: - The Tribunal held that where the assessee neither performed the manufacturing activity nor paid excise duty on the goods, but the job-worker both manufactured the goods and paid the duty, the assessee cannot be treated as the manufacturer for the purpose of taking Cenvat credit of input services. The earlier decisions relied upon by the appellant involved factual situations where the assessee had performed part manufacture or had paid duty on the final product by following applicable rules. Those factual distinctions separate those precedents from the present case. The Tribunal therefore found no justification to allow credit to the appellant in the circumstances on the ground that the procedures for claiming credit cannot be bypassed by invoking revenue-neutrality or theoretical entitlement of another person to take credit. [Paras 6]

Credit disallowed; the appellant is not entitled to Cenvat credit of the service tax on the GTA services in the facts of these cases.

Interpretation of input service definition - assessment limitation - normal period - penalty for wrongful availment of credit - Whether the penalties imposed for taking the disputed credit should be sustained and whether any restriction on the period of demand was warranted. - HELD THAT: - The Tribunal noted that parts of the dispute involved questions of legal interpretation (including scope of the expression relating to clearance of final products and applicability of credit in earlier decisions) where reasonable differences of view existed. It observed that the appellant had acted on a bonafide belief and that the proceedings involved interpretational issues. In consequence, the Tribunal considered the penalties to be unjustified and set them aside. The Tribunal also referred to earlier reasoning that certain demands could be restricted to the normal limitation period; however, in the operative conclusion of the present order the demand and interest are left undisturbed while penalties are quashed. [Paras 6, 7]

Penalties set aside; demand and interest are not disturbed by this order; where appropriate earlier reasoning limited certain components to the normal period but the operative relief granted is the deletion of penalties.

Final Conclusion: Appeals partly allowed by setting aside the penalties imposed; the demands and interest challenged are maintained and the appellant's claim for Cenvat credit on the GTA services is rejected in the facts of these cases.

Cenvat credit - entitlement to credit where manufacturing is carried out by job worker - job work - principal manufacturer liability under Notification No. 214/86-CE dated 25.03.1986 - Rule 4(5)(a) of Cenvat Credit Rules, 2004

Cenvat credit - entitlement to credit where manufacturing is carried out by job worker - Rule 4(5)(a) of Cenvat Credit Rules, 2004 - job work - Assessee's entitlement to Cenvat credit on inputs and capital goods where manufacture is carried out by job workers on behalf of the assessee - HELD THAT: - The Tribunal held that under the Cenvat Credit Rules the assessee is entitled to avail Cenvat credit on inputs and capital goods even though the physical manufacturing operations were carried out by job workers. Rule 4(5)(a) permits sending inputs and capital goods for job work and requires return of resultant goods to the principal manufacturer within the stipulated period; the manufacturing by job workers is treated as manufacturing by the assessee because it is carried out exclusively on the assessee's behalf. Notification No. 214/86-CE confirms that the principal manufacturer is liable to pay duty in case of job work, reinforcing that the final product cleared by the assessee is treated as its own manufacture. Applying these provisions, the Tribunal found no legal infirmity in the adjudicating authority's allowance of credit and upheld the impugned order in favour of the assessee.

Assessee entitled to Cenvat credit in respect of inputs and capital goods where manufacturing was performed by job workers on behalf of the assessee; impugned order allowing credit upheld.

Cenvat credit - Disposition of appeals - HELD THAT: - In view of the Tribunal's finding upholding the order-in-appeal that allowed the assessee's claim, the assessee withdrew its appeal and the Tribunal disposed of it as withdrawn. The Revenue's appeal challenging the allowance of Cenvat credit was dismissed.

Assessee's appeal dismissed as withdrawn; Revenue's appeal dismissed.

Final Conclusion: The Tribunal held that goods manufactured by job workers on behalf of the assessee are to be treated as manufacture by the assessee for Cenvat credit purposes (Rule 4(5)(a) and Notification No. 214/86-CE), upheld the impugned order allowing credit, dismissed the Revenue's appeal and disposed of the assessee's appeal as withdrawn.

Cenvat credit on input services - definition of input service - nexus between input services and manufacture or sale - classification of supply as rent-a-cab versus supply of tangible goods - followed precedent/ratio of earlier decisions

Cenvat credit on input services - nexus between input services and manufacture or sale - definition of input service - Entitlement to cenvat credit in respect of the listed input services - HELD THAT: - The Tribunal held that the services for which credit was denied were correctly classifiable as input services within the accepted definition, since they were used in relation to the overall manufacture and sale of goods and thus bore the requisite nexus to the manufacturing activity. The appellant relied on a series of earlier decisions of this Tribunal and various High Courts establishing the admissibility of credit for the services in question; the Tribunal followed the ratio of those precedents and found no need to reopen the settled legal position. On this basis the Tribunal allowed the credit claimed on the listed services.

Credit on the listed input services is admissible; the impugned order is set aside and the appeal is allowed.

Classification of supply as rent-a-cab versus supply of tangible goods - cenvat credit on input services - Characterisation of the invoice labeled 'rent-a-cab' and its effect on credit admissibility - HELD THAT: - On examination of the invoice, the Tribunal found that the transaction was not for rent-a-cab services but constituted supply of tangible goods used for organising a medical camp connected with promotion of the appellant's product. Being a service/input used in relation to manufacture/sale, it qualifies as an input service and is eligible for cenvat credit. The Tribunal applied the same precedential approach taken for the other services and allowed the credit accordingly.

The entry described as rent-a-cab is treated as supply of tangible goods used in promotion and is eligible for cenvat credit.

Final Conclusion: The Tribunal followed settled precedent and found that the services claimed by the appellant qualify as input services having nexus with manufacture and sale; the disputed entries (including the item described as rent-a-cab which was held to be supply of tangible goods for promotion) are eligible for cenvat credit. The impugned order is set aside and the appeal is allowed.

Exemption under Sr. No. 12 of Notification No. 14/2002-C.E. - Condition-3 and Explanation-II - "deemed duty paid" fiction - harmonious construction of conflicting provisions to avoid redundancy and absurdity - availability of exemption where inputs are received under exemption provided no Cenvat credit is taken - relevance of Explanatory Notes / legislative intent in construing exemption notifications - binding effect of Larger Bench and Supreme Court rulings on identical issue

Exemption under Sr. No. 12 of Notification No. 14/2002-C.E. - Condition-3 and Explanation-II - "deemed duty paid" fiction - availability of exemption where inputs are received under exemption provided no Cenvat credit is taken - Exemption under Sr. No. 12 of Notification No. 14/2002-C.E. is admissible for processed knitted cotton fabrics even when the input grey/unprocessed knitted fabrics are received under an exemption, provided the assesse has not taken Cenvat credit. - HELD THAT: - The Tribunal held that Condition-3 and Explanation-II of Notification No.14/2002-C.E. must be read harmoniously. Explanation-II creates a statutory fiction that textile yarns or fabrics shall be deemed to have been duty paid even without production of duty-paying documents. Construing Condition-3 in isolation to require actual duty payment on inputs would render Explanation-II redundant and produce anomalous results (such as forcing small processors into the Cenvat credit route and causing cascading taxation). The Explanatory Notes to the Budget Bulletin 2002 show legislative intent that the benefit of the notification be available without insisting on documentary proof of duty payment, the only substantial condition being non-availment of Cenvat credit. The Larger Bench decision in Arvind Products Ltd. adopting this construction was affirmed by the Supreme Court; consequently the same ratio applies and the exemption must be allowed where no Cenvat credit has been availed. [Paras 4, 5]

Impugned order set aside and appeals allowed by applying the ratio that fabrics received for processing are to be treated as "deemed duty paid" under Explanation-II and exemption under Sr. No.12 is admissible where no Cenvat credit is taken.

Final Conclusion: Following the Larger Bench and the Supreme Court decisions, the Tribunal allowed the appeals, holding that processed knitted cotton fabrics are eligible for exemption under Sr. No. 12 of Notification No. 14/2002-C.E. by treating grey fabrics received for processing as "deemed duty paid" under Explanation-II, subject to the condition that no Cenvat credit has been availed.

Cenvat credit - job work - reversal of cenvat credit - modvat scheme - exemption under Notification No. 214/86-CE - requirement under Rule 4(5A) of the Cenvat Credit Rules, 2004 regarding job work

Cenvat credit - job work - reversal of cenvat credit - modvat scheme - exemption under Notification No. 214/86-CE - requirement under Rule 4(5A) of the Cenvat Credit Rules, 2004 regarding job work - Reversal of cenvat credit was not required where inputs were sent to a job worker who cleared the intermediate product under the exemption and paid duty, and the appellant took credit of that duty. - HELD THAT: - The Tribunal applied the principle articulated by the Hon'ble Gujarat High Court in Rohan Dyes & Intermediates Ltd that under the modvat scheme the modvat (or cenvat) of the final product must include the cost of inputs and credit is to be taken at the time of clearance of the final product. On that basis the Tribunal rejected the Revenue's condition that the assessee should have reversed cenvat credit prior to sending goods to the job worker where the job worker had not followed the procedural formalities. The judgment notes that the earlier provision in Rule 57F(2)(b) corresponds to the present provision in Rule 4(5A) of the Cenvat Credit Rules, 2004, and relies on this consistency in holding that no reversal was warranted in the facts of the case. Relying on this precedent, the appellate order set aside the demand for reversal, interest and penalty as confirmed by the lower authority. [Paras 4, 5]

Appeal allowed; confirmation of demand for reversal of cenvat credit, interest and penalty set aside.

Final Conclusion: The Tribunal allowed the appeal relying on the Gujarat High Court decision in Rohan Dyes & Intermediates Ltd, holding that where a job worker cleared the intermediate product under the exemption and duty was paid and credited by the appellant, reversal of cenvat credit was not required; the demand, interest and penalty confirmed below were set aside.

Rejection of books of accounts - estimation of concealed turnover - use of electricity consumption as basis for estimation - discovery of undisclosed stock during survey - entitlement to input tax credit on estimated purchases

Rejection of books of accounts - discovery of undisclosed stock during survey - Validity of rejection of the assessee's books of accounts - HELD THAT: - The Court held that the authorities' finding of undisclosed stock discovered during the survey and the assessee's conduct of purchase/manufacture and sale outside regular books support the conclusion that the books were properly rejected. Although the quantity of excess/shortage on the survey day alone might not justify the entire enhancement, the subsequent reconciliation showing concealed purchases and sales and the non-production of books at the time of survey lend factual foundation to the finding of concealment. On these facts the rejection does not suffer from perversity and was rightly upheld. [Paras 6]

Rejection of books of accounts upheld.

Estimation of concealed turnover - use of electricity consumption as basis for estimation - Permissibility and reasonableness of estimating turnover on the basis of electricity consumption - HELD THAT: - The Court found that, while a one-day stock discrepancy alone may be insufficient to estimate annual turnover, the combination of rejected accounts, discovered undisclosed stocks and other materials justified consideration of electricity consumption disclosed by the assessee. Given that the assessee carried on the same manufacturing activity in earlier years, electricity consumption provided a fair basis for forming an estimate of concealed turnover. The decision relied upon by the assessee was distinguishable because in that case there was no material to justify rejection of books; where rejection is valid, electricity consumption retains relevance and is neither arbitrary nor irrelevant. [Paras 7]

Estimation based on electricity consumption upheld as permissible on the facts of the case.

Entitlement to input tax credit on estimated purchases - Whether benefit of input tax credit (purchase tax) is allowable in respect of estimated enhancement of purchases - HELD THAT: - The Court recorded the position conceded by the revenue that the assessing officer had granted benefit of input tax credit on purchases and that, if the assessee deposits tax on the estimated enhancement of purchase, he would be entitled to corresponding benefit when tax is paid on the estimated sale of manufactured goods. The Court accepted this approach and observed that the benefit would follow upon payment of the tax on estimated purchases. [Paras 5, 8]

Assessee to be granted benefit of input tax credit on estimated purchases upon deposit of tax on such estimated purchases; corresponding adjustment to be allowed against tax on estimated sales.

Final Conclusion: Revision dismissed; rejection of books of accounts affirmed, estimation of concealed turnover based on electricity consumption sustained on the facts, and benefit of input tax credit in respect of estimated purchases to be allowed upon payment of the estimated purchase tax.

Tribunal's discretion in imposing stay conditions - statutory sanction for pre-deposit - pre-deposit for stay - instalment payment of pre-deposit

Tribunal's discretion in imposing stay conditions - statutory sanction for pre-deposit - pre-deposit for stay - Validity of the Tribunal's interim condition requiring pre-deposit and the High Court's scope to interfere with that discretion - HELD THAT: - The Court declined to interfere with the Tribunal's exercise of discretion in imposing conditions for grant of stay, noting that such discretion is supported by statutory sanction. While acknowledging the petitioner's pleaded financial difficulties and a request for additional time, the High Court emphasised that it will not supplant the Tribunal's discretionary order. The court, however, exercised its supervisory jurisdiction to grant relief limited to permitting a modified mode of compliance, without disturbing the underlying condition that a pre-deposit be made to maintain the stay. [Paras 5]

Tribunal's interim condition that the petitioner make a pre-deposit to sustain stay is not interfered with; the High Court will not displace the Tribunal's statutory discretion.

Instalment payment of pre-deposit - condonation/extension of time for deposit - Whether the petitioner may be allowed additional time and pay the pre-deposit by instalments - HELD THAT: - Having accepted the petitioner's representation of acute financial difficulty, the High Court granted a limited and specific modification of the Tribunal's interim direction: the petitioner was permitted to make the required deposit in three equal monthly instalments. The court made clear that this concession was conditional and temporal; failure to pay any one instalment within the stipulated time would entitle the Tribunal to proceed further in accordance with its earlier order. [Paras 6]

Petitioner permitted to deposit the pre-deposit in three equal monthly instalments; failure to pay any instalment allows the Tribunal to proceed.

Final Conclusion: Writ petition disposed by refusing to disturb the Tribunal's condition for pre-deposit but permitting the petitioner a limited accommodation to pay the deposit in three equal monthly instalments, subject to the Tribunal resuming proceedings if any instalment is not paid.

Defer coercive steps - stay petition pending before appellate tribunal - procedural fairness - statutory remedy of second appeal

Defer coercive steps - stay petition pending before appellate tribunal - procedural fairness - Direction to the assessing authority to refrain from taking coercive steps until the appellate tribunal determines the pending stay petitions filed in the second appeals. - HELD THAT: - The petitioner, a registered dealer, had challenged assessment orders by filing appeals and contemporaneously filed stay petitions before the Appellate Tribunal. The Court noted that the petitioner had availed the statutory remedy of second appeal on time and that, as a matter of procedural fairness, the authorities should await the appellate forum's decision on the stay petitions before initiating coercive action. On that basis the writ petition was disposed by directing the respondent authority to defer coercive measures until the second respondent considers the pending stay petitions, with an expectation of expeditious disposal by the tribunal.

Respondent authority directed to refrain from coercive steps until the Appellate Tribunal considers the pending stay petitions; tribunal urged to decide the stay petitions expeditiously.

Final Conclusion: Writ petition disposed by directing the assessing authority to defer coercive action pending consideration of the stay petitions by the Appellate Tribunal; the tribunal is expected to decide the stay petitions promptly.

Principles of natural justice - personal hearing - request for adjournment / extension of time - intimation of date of hearing - setting aside assessment for breach of natural justice - remand for fresh consideration after hearing - penalty under Section 27(3)(c) of the Tamil Nadu Value Added Tax Act, 2006

Principles of natural justice - personal hearing - request for adjournment / extension of time - intimation of date of hearing - setting aside assessment for breach of natural justice - remand for fresh consideration after hearing - Assessment orders set aside for failure to inform the petitioner of the date of personal hearing after a written request for extension, and matter remitted for fresh hearing and decision on merits. - HELD THAT: - The Assessing Officer issued a notice offering an opportunity to be heard "on any working day within the period of 10 days" without fixing a specific date. The petitioner wrote seeking 15 days' time, but there was no recorded communication from the Assessing Officer accepting or rejecting that request or fixing an alternative date. The Court followed its earlier reasoning that a written request for extension must be considered and the decision communicated by fixing the next date of hearing; absent such intimation the assessee cannot be expected to appear. The assessment orders were therefore passed without affording the petitioner a clearly notified personal hearing, which amounts to violation of the principles of natural justice. Given the proposed imposition of penalty, the appropriate course is to set aside the impugned orders and remit the matter to the Assessing Officer to intimate a specific date for personal hearing, allow the petitioner to file objections and appear, and thereafter decide the assessment on merits within the stipulated time. [Paras 6, 7]

Impugned assessment orders set aside; matter remitted to Assessing Officer to intimate a date of personal hearing within two weeks, petitioner to file objections and appear, and Assessing Officer to pass fresh assessment orders on merits within six weeks thereafter.

Final Conclusion: Writ petitions allowed; assessment orders of 19.09.2018 are set aside and the matter is remitted to the Assessing Officer for fresh adjudication after affording a specifically intimated personal hearing, with the directions and timelines specified by the Court.

Priority of secured creditor - priority under Section 31B of the SARFAESI Act - sale under SARFAESI Act free from encumbrances - attachment and effect on registration - doctrine of priority of Crown/State debts

Priority under Section 31B of the SARFAESI Act - sale under SARFAESI Act free from encumbrances - attachment and effect on registration - Whether registration of the sale certificate issued by the secured creditor under the SARFAESI regime could be refused by the revenue authority on the ground of an earlier attachment for government dues. - HELD THAT: - The Court found that the bank conducted an e-auction of a secured asset, the petitioner was the highest bidder, paid the entire sale consideration and was issued a Sale Certificate stating that the property was sold free from all encumbrances. The registration was refused only on account of an earlier rapat/attachment for government dues against the previous owner. Section 31B, as amended, gives secured creditors priority to realize secured debts by sale of secured assets and requires such claims to be paid in priority over government dues. Applying that statutory priority and the authorities relied upon by the Court, a purchaser at a SARFAESI auction who acquires the secured asset after payment and receipt of a sale certificate cannot be saddled with the previous owner's dues to the State in the absence of a statutory provision creating a first charge in favour of the State. The Court therefore held that the revenue attachment did not prevail over the bank's sale under the Act and that the Tehsildar's refusal to register on the ground of the prior rapat was not tenable.

Registration of the Sale Certificate issued by the secured creditor was directed to be carried out forthwith; the Tehsildar's refusal on account of the prior attachment was overruled.

Final Conclusion: Writ petition allowed; respondent No.2 directed to register the sale deed in favour of the petitioner forthwith pursuant to the SARFAESI sale and the priority accorded to secured creditors under Section 31B.

Investigating officer being the informant or complainant vitiates prosecution under the NDPS Act - requirement of a fair investigation as part of Article 21 - reverse burden of proof under the NDPS Act - prohibition on the informant/complainant/searching officer conducting investigation in cases carrying reverse burden

Investigating officer being the informant or complainant vitiates prosecution under the NDPS Act - requirement of a fair investigation as part of Article 21 - reverse burden of proof under the NDPS Act - Whether the conviction and trial under the NDPS Act stand vitiated because the Investigating Officer was also the complainant who filed the complaint - HELD THAT: - The Court applied the law laid down by the Supreme Court in Mohan Lal, holding that where the person who makes the allegation (whether as informant, complainant or searching officer) is the same person who conducts the investigation, serious doubts arise as to the fairness and impartiality of the investigation. This principle is particularly imperative in prosecutions under the NDPS Act because the statute casts a reverse burden of proof and thus places a special obligation on the prosecution to establish a fair investigation on the face of the record. The Court examined the evidence and found that PW-1 Anju Singh was both the complainant and the Investigating Officer; the contention that another officer (PW-4) conducted the investigation was rejected as a belated, unpersuasive argument. In view of Mohan Lal and the mandates of Article 21, the Court concluded that the investigation and consequent trial were vitiated by this conflation of roles and that the appellant was entitled to acquittal. The Court treated the principle as determinative and applied it to the facts, resulting in reversal of conviction. [Paras 16, 17, 18, 19]

The conviction and trial were vitiated because the Investigating Officer (PW-1) was also the complainant; the appellant is entitled to acquittal.

Final Conclusion: The appeal is allowed; the conviction is set aside and the appellant is acquitted and to be released forthwith unless detained in connection with any other case; trial court records to be returned with a copy of this judgment.